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FAFSA / Tax Form Questions

2456

Replies to: FAFSA / Tax Form Questions

  • VinnyMVinnyM Registered User Posts: 47 Junior Member
    ======================================================
    Question 86: What was your parents' total income tax for 2017?
    ======================================================

    The 2019–20 Completing the FAFSA® Form (Published September 2018) advice for Question 86: What was your parents' total income tax for 2017? on page 48 does not say "The amount may be negative" or "If negative, enter 0".

    Since Line 56 of my parents' 2017 1040 return is 0 and Line 46 is $498, Line 56 minus Line 46 is –$498.

    Do I answer Question 86 with –$498 or $0

    Thanks!

    VM
  • mommdcmommdc Registered User Posts: 11,248 Senior Member
    edited December 2018
    If your parents are amending their 2017 tax return then you need to let the school know and provide the 1040X to them.

    Why are they amending it? Was there a mistake?

    Were you in college in 2017? Did you have taxable scholarships to report?

    You would report them on your tax return, not your parents'.

    The FAFSA asks question 44d because if a student reported taxable scolarships as part of AGI on their 2017 tax return, then the amount in question 44d will be subtracted from student income for EFC calculation purposes on the FAFSA.

    But if you didn't file a 2017 tax return and didn't report taxable scholarships on your return,then you would leave this question blank.

    You would indicate any income you had for that year and say that you didn't file a return.
  • mommdcmommdc Registered User Posts: 11,248 Senior Member
    If your parents had no tax due the answer would be $0 tax paid.

    If they haven't amended their 2017 tax return yet, and filed a joint return, you can use the data retrieval tool in the FAFSA. It would bring all relevant numbers over from their tax return automatically.

    But if they later amend the 2017 return, you would need to contact colleges with that information, in case the FAFSA EFC would change.
  • thumper1thumper1 Registered User Posts: 76,038 Senior Member
    If your parents had no tax due the answer would be $0 tax paid

    Just clarifying....this is the amount of taxes your parents PAID in 2017, if any.
  • VinnyMVinnyM Registered User Posts: 47 Junior Member


    @allyphoe,

    Thank you for your help with Question 93d: How much taxable college grant or scholarship aid did your parents report to the IRS as Income?

    Sincerely,

    VM


  • VinnyMVinnyM Registered User Posts: 47 Junior Member
    '
    Question 44d: Student’s College Grant and Scholarship Aid Reported to the IRS as Income. (How much taxable college grant or scholarship aid did you report to IRS as income?)
    @mommdc,
    Yes, Fall 2017 was my first semester in college, no, I did not have any taxable scholarships or grants, and thank you for explaining Question 44d.
    VM
    @twoinanddone,
    Yes, I did have scholarships and grants ($27,250) used for room, board and other QEE (Total QEE: $28,890).
    Thanks for motivating me to get my hands around the actual numbers!
    VM
    @CaMom13,
    If I understand you correctly, since I was a full-time student with university-billed qualified tuition and related expenses and other qualifying education expenses in excess of my scholarships and grants, none of which were specifically taxable, then the entry for Question 44d is $0. Is this correcct?
    Thank you, in advance, for your assistance!
    VM

  • VinnyMVinnyM Registered User Posts: 47 Junior Member

    Quoting @mommdc . . .

    If your parents are amending their 2017 tax return then you need to let the school know and provide the 1040X to them.

    Why are they amending it? Was there a mistake?

    [SNIP]

    But if they later amend the 2017 return, you would need to contact colleges with that information, in case the FAFSA EFC would change.
    @mommdc,

    Here’s the rest of the story, as my father’s hero, Paul Harvey, would say . . .

    My parents filed their 2017 taxes using Form 1040 with a $0 tax liability and itemized deduction of $34,565 (versus the standard deduction of $12,700).

    My father’s calculations indicate that filing an amended return for 2017 using Form 1040X and 1040A with the standard deduction would result in a combined federal and state tax liability, including, interest, fees and penalties, of approximately $1,600.

    However, his calculations also indicate that the effect on my sister’s and my EFC, Pell Grant and institutional aid resulting from:

    (i) the use of simplified EFC formulas (since the only disqualifier for using the simplified EFC formulas is my parents’ decision to itemize their deductions),

    (ii) a federal income tax liability of $1,000 versus $0, and

    (iii) other minor changes in data,

    would SIGNIFICANTLY outweigh the $1,600 opportunity cost of filing a 1040X/1040A return.

    Furthermore, the statement "would SIGNIFICANTLY outweigh the $1,600 opportunity cost" is before taking into account medical expenses of $30,000 that were previously reported on Schedule A that can now be submitted for consideration as a special circumstance at both my sister's college and my university.

    Comments, suggestions, warnings, Anyone?

    Thanks!

    VM
  • Madison85Madison85 Registered User Posts: 10,688 Senior Member
    You had scholarships and grants used for other than tuition and you didnt file a 2017 tax return?
  • thumper1thumper1 Registered User Posts: 76,038 Senior Member
    edited December 2018
    My parents filed their 2017 taxes using Form 1040 with a $0 tax liability and itemized deduction of $34,565 (versus the standard deduction of $12,700).

    @BelknapPoint please check my post for accuracy.

    1. The standard deduction in 2017 was NOT $12,700.

    2. With $34,000 plus in deductions...how would you be eligible to file a 1040A? Does your family own a business?

    3. The medical expenses can be sent as a special cirucmstance consideration at any college. It you do need to know that these are considered on a case by case basis...and sometimes do not net a dime in additional need based aid.

    4. Does your college meet full financial need for all? If not...this might not net you anything.

    5. What was your sister’s FAFSA EFC for the current academic year.

    6. If your parent tax return was not accurate, then absolutely they need to amend it.

    7. Keep an eye on your student portal,at each school, and check your email and spam folders....it is HIGHLY likely you will be selected for verification of your financial aid application. Make sure you comply with any requests...immediately.
  • BelknapPointBelknapPoint Registered User Posts: 4,306 Senior Member
    1. The standard deduction in 2017 was NOT $12,700.

    The standard deduction in 2017 for a qualifying widow(er) or those married filing jointly was $12,700.

    2. With $34,000 plus in deductions...how would you be eligible to file a 1040A? Does your family own a business?

    You could choose not to itemize deductions, which requires form 1040, and just take the lesser standard deduction and use form 1040A instead. It sounds like OP is describing a strategy to qualify for the FAFSA simplified needs test, although his posts are very confusing.
  • mommdcmommdc Registered User Posts: 11,248 Senior Member
    For purpose of determining tax free status of scholarships and grants, only tuition, qualified fees and books are QEE.

    If you had scholarships or grants that paid for room and board and other nonqualified expenses in 2017, then you needed to file a tax return, especially if they were more than the standard deduction.

    You might have received a 1098T from the college with tuition and qualified fees listed in box 1 or 2 and scholarships and grants in box 5
  • mommdcmommdc Registered User Posts: 11,248 Senior Member
    If your parents are going to amend their 2017 tax return to switch from 1040 and itemizing deductions to 1040A and standard deduction, then they should do that soon so you and your sister can do your FAFSAs.

    Is your sister still in college this year, and will she be still in college 2019/20?

    Also, you should file a 2017 tax return as well if you were required to, which it sounds like you were.

    The FAFSA has been available since October, why are you doing this now?

  • VinnyMVinnyM Registered User Posts: 47 Junior Member

    Quoting @Madison85 . . .

    You had scholarships and grants used for other than tuition and you didn't file a 2017 tax return?

    Quoting @mommdc . . .

    . . . you should file a 2017 tax return as well if you were required to, which it sounds like you were.

    Yes, I had scholarships and grants used for other than tuition and I didn't file a 2017 tax return.

    Here was my rationale for not filing a 2017 tax return . . .

    (1) I had no earned or unearned income in 2017.

    (2) None of my scholarships or grants were specifically designated as taxable.

    (3) My university reported $27,250 in Box 5 - Scholarships or Grants, $27,194 in Box 2 - Amounts Billed for
    qualified tuition and related expenses, and my other qualified education expenses, i.e., books, supplies, and equipment, totalled $1,696, therefore my QEE exceeded my scholarships and grants by $1,640; i.e., no taxable scholarships and grants.

    No, I did not and was not planning to file a 2017 tax return.

    Was/Is this a mistake and if so, why?

    I eagerly await your (or anyone else's) reply!

    Thanks!

    VM




  • VinnyMVinnyM Registered User Posts: 47 Junior Member

    Quoting @mommdc . . .

    The FAFSA has been available since October, why are you doing this now?

    The results of my procrastination, my being very challenged in college, and my father's decision on whether or not to file an amended return for 2017.

    What disadvantage have I incurred by not filing earlier?

    Thanks!

    VM



  • thumper1thumper1 Registered User Posts: 76,038 Senior Member
    https://talk.collegeconfidential.com/faqs-on-college-confidential/1731648-how-to-quote-someones-post.html#latest

    @VinnyM could you please read the above thread which will tell you how to quote posters.

    Re: later filing if the FAFSA. There are some forms of need based aid that are limited funding per college campus and are awarded on a first come first served basis. If you haven’t already completed the FAFSA, it’s very likely you will not get these...as funds are likely already allocated. These include federal work study and SEOG.

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